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Tuesday, May 15, 2012

Greek Coalition Talks Fail, Forcing New Election

ATHENS — Greek political leaders said Tuesday that they had failed to find consensus to form a government, pushing the rudderless country to new elections amid political instability and volatility in financial markets that could push Greece to abandon the euro. Markets immediately dropped on the news, and the euro’s value declined.
President Karolos Papoulias was expected to make plans for a caretaker government on Wednesday that would lead to new elections in a month. He is being forced to act by the failure of a last-ditch attempt to form a unity government aimed at keeping Greece in the euro zone and forcing it to honor its commitments to the foreign lenders who are keeping the country afloat.

The Socialists leader, Evangelos Venizelos, said in a televised statement that he hoped Greeks would make a more “historically well-considered” choice when they returned to the polls. He added that the talks on a unity government had failed “because certain individuals put their party’s interest above the good of the country.”

His remarks were aimed at the Coalition of the Radical Left, known as Syriza, which after placing second in the elections on May 6 said it would not back a government with the Socialists and center-right New Democracy party. Polls show Syriza would place first in new elections on a platform of scrapping Greece’s loan agreement with its so-called troika of foreign lenders — the European Commission, European Central Bank and International Monetary Fund — and the austerity measures that have come with it.

The failure to form a government underscored the disorder in Greece, where the debt crisis precipitated the collapse of a political order that helped drive the country into the debt crisis and that now seems powerless to steer it out of its predicament.

“This is the problem of the country,” said Loukas Tsoukalis, the president of the Hellenic Foundation for European and Foreign Policy, a research group in Athens. “On the one hand there is a failed political class, on the other demagogues who ride on anger.”

“It’s not looking good,” he added.

In the elections on May 6, Golden Dawn, a neo-Nazi party, received 7 percent of the vote and 21 seats in Parliament, largely on voters’ fears of illegal immigration and anger that the government had failed to maintain order in Athens.

But Greece’s foreign lenders are more concerned about Syriza. Critics say that if it comes to power and abandons the loan agreement, the troika would stop financing Greece, which would default on its loans and be forced to abandon the euro. Alexis Tsipras, Syriza’s 37-year-old leader, has said that if Greece is forced to stop using the euro, it will be because its loan agreement terms were impossible to meet.

On Tuesday, he defended his decision not to join a coalition with the Socialists and New Democracy. “All they did over the past eight days was to present a dilemma — memorandum or elections — in the secret hope of either blackmailing us into joining the pro-bailout forces or securing a better outcome in the next elections,” Mr. Tsipras said.

Mr. Tsipras — whose party received 17 percent of the vote, compared with 19 percent for New Democracy and 13 percent for the Socialists — said he had remained true to his voters’ wishes. “With dignity, we took the decision not to betray you, your hopes and expectations,” he said.

His political rivals and his critics consider Mr. Tsipras to be immature and a risk to Greek stability, but he has irrefutably changed the terms of the debate